SEC Questions Role Of Hedge Funds In Bankruptcies

Law360, New York (December 1, 2005, 12:00 AM EST) -- The Securities and Exchange Commission has begun an investigation into the participation of hedge funds in bankruptcy proceedings, concerned that some fund managers may be overstating their bond holdings in troubled companies in order to secure spots on creditors’ committees.

The investigation comes just weeks after the SEC filed a civil case against Blue River hedge fund manager Van Greenfield, who scored a seat on WorldCom’s creditors’ committee by claiming to own $400 million in WorldCom bonds, a statement that was later proven false.

According to...
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